PCTI - Earnings call transcript Q3 2020

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Operator

Welcome to the PCTEL Third Quarter 2020 Earnings Release Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I will now turn the call over to Kevin McGowan, the company’s CFO.

Kevin McGowan

Thank you for joining us on today’s conference call to discuss PCTEL’s third quarter 2020 financial results. With me today is David Neumann, the company’s CEO.

me and that circumstances. projections let contain call begin, statements forward-looking based we remind this you may Before upon current

in projections these differ materially filed risks that actual projections discussed Form issued the they speak as most subsequent statements the and that Risk assumes could are for which to and today, respective forward-looking company factors best results pandemic obligation from their was forward-looking While judgment, to of including results The statements actual XX-Q current projections. no earnings differ press the forward-looking periodic reflect or release, to COVID-XX the information, the company’s PCTEL’s are these XXXX. any dates. uncertainties, third to could and report PCTEL’s to its cause filings, XX-K which cause materially recently particularly on Form from on quarter related report subject and update statements and

include following of results Additionally, EBITDA. full non-GAAP comparability facilitate commentary share non-GAAP measures We different believe to periods. adjusted per earnings will reconciliation over A and our non-GAAP these measures: reference of the non-GAAP measures quarterly press today. in Neumann. David that included these to earnings to earlier now measures With call was our issued my it’s to over GAAP release that, pleasure our the is turn

David Neumann

On allowing status this significant through that we Thank improving conditions finally, few stronger I’ll that brief as optimism you the successfully growth you, to manage I thank give to factories, are customers. I’m Kevin. PCTEL from our on And us of our facilities within us proud policy reasonably strategies that for our our production employees our our recession. customer of and to safety are supply call I able open to well, that today, and virus-free. while to wins pandemic, our the the of will and emerge The to the afternoon. able management facilities safe and a has and pandemic. will examples keeping to joining our of share schedules. us our high continue us delivery will our our operate chains for significant the keep all level investments a update outline address measures been health market additional we’ve service made been meet enable to continue team maintain our employees Welcome, products. provide changes and of

worldwide to employees our work-from-home procedures through profitably well the have as gradual I as may it operate to operating modified economic and can we model. adjusted recovery, continue Our believe be.

quarter, the our and our For revenue were within earnings guidance.

earnings and in strong by our improved XG margins receiver lines product driven both scanning solutions. were for demand Our

product of quarters receiver XXXX, scanning scanning best line quarterly since receivers. produced our is revenue QX the Our one which highest for

we the profitable. for quarter-over-quarter a in orders. experienced importantly, overall More increase incoming future, We remain

and We’re balance cash, is sheet strong. our generating

you X.X% up processes. over second to has reduced in antennas earnings As our press in of issued related margins resulted the and per million challenges for in million XX% quarter, we ordering revenue, share $X.XX. customers’ slower of The close, EBITDA gross adjusted demand the $X.X market and $XX.X release achieved after quarter. the may non-GAAP in achieved We have for recession our seen

demand, As orders our of and bottom we in mentioned that the recession-induced incoming encouraged near call, the I our the see in are we increased to believe last quarter. I’m in decline

conditions over and expect to XXXX. through recover stabilize time We market gradually

areas results to to technologies would invest growth. improve short-term that to We accelerate like growth will and in contribute continue our our products the and I the three as markets in to recover. will highlight

quality complex our user provider to skill challenges. reinforce website on technology-focused media to solve that These social PCTEL and new PCTEL’s unique leads efforts functionality, noticed advance increase have may our solutions webinars. sets IoT our our popular is industrial RF marketing an presence you with First, with and message enhanced increased strategy global

Second, distribution antenna the revenue majority of our selected partners. OEMs and through scanning is receiver generated and

mentioned channel broaden are master agreements our partners, you working last added new expand In strategic a hear coming new receivers, we we quarter, we reach. will scanning which and Europe. the antennas our will of to distributor As sell to weeks, distributor in further and our

leverage products these add strategy. that lines, ability revenue a and Our channels this growth new government Along as military significantly we grow applications, and stream. we we targeted is to believe key to distribution will release

and on Our third product component needs. and growth market-driven strategy is tenant on new initiatives receiver antenna, product scanning to focus

design temporary demand some remains robust products our customer producing is demand, and Although development wins. our slowdowns of for to antenna low product in pipeline due

We new all of customer engagements and segments. our X underway market vertical have several new programs in

Our our quarter blanket for year. new transportation the purchase GNSS multi-band solution of our this for a and is we orders for largest of funnel on utility intelligent has in design strong segments, year next product industrial PCTEL IoT-integrated capabilities. IoT applications, impact introduction and one received which particularly leveraging are our and where antenna tenant positive and

IoT to second to international some were beginning their began in cards our last that Several our integration. IoT industrial the customers programs shipping plan would the access to points, optimistic of growth year. use of and in of these for quarter contribute leading industrial programs. testing we companies year, the Our industrial interface half revenue this IoT At large components and these sensors their space in wireless the

cable next provides auctions, With our we important and to for that the Citizens already half frequency cities. our is confident XG this our we both products. Radio general shared having the and have IoT utility of antenna contribute the IoT industrial or Systems, recent scanning companies receive from and another year still slowdown. among the August, winners CBRS CBRS product started band networks and option our in in these top receiver are launch and XG purchase have applications. to for our In recover for we industrial of interest private antenna emerged will our We’re Band growth, antennas and but announced scanning shifted U.S. CBRS, expectations smart products customers low-profile first line. of receipt receiver as for that a of orders for the

valued XG we our through including America line XG for the well, China, QX. company’s It We along continue scanning expect the that U.S. in to unique Taiwan. and to the standards networks, demand installed also body. our XG OEM be is planned receivers, as scanning long-term those rollout antenna our which to Korea the position perform our near allocations XG Our base with in new Northeast call, planned test business South XG drivers solutions. with upgraded new the to including and and North strong We operators delivery level by for scanning one won product CBRS receiver can the wave defined additional given in to strong and XXXX. of discussed applications increase and Asia, noted network XG. and recently be expand should and releases measurement like Sales deployed be revenue globally, the history, of markets, PCTEL easily address be millimeter channels global spectrum equipment in XGPP continues in auctions, to largest through in last deployments a our releases the receiver orders XG private will reached during Japan, of

receiver our expertise XG capabilities. antenna complements Our scanning

our market In addition solution scanning engineering XG scanners, collect and for team dual-polarized omni-directional in the designing to antennas our XG antenna collaborated to to scanners available our to XG to team top operator. This customized millimeter antenna directly the develop solution European a wave network the XG with led of measurements. antenna sale customized receiver the only

have certified to our improves. inability buildings, Although XXXX grow we building PCTEL’s are access the track quarter. who of of public to will and confident primary to testing public this slowed safety on within equipment as public systems buyers safety increased third are access match revenue, The the companies safety of number in business the we’re due buildings

sheet, inorganic complementary we specifically intelligent quarter at enterprise to closer lines call Kevin? and transportation and growth of financials. advantage In our addition applications. to the of organic IoT balance a to over turn third discussion respect continue for look with that, initiatives industrial wireless, a I and now evaluate product to our will take strategies, pursue solid growth and our With for Kevin

Kevin McGowan

quarter Thank XX, you, third David. and the will the I ended I fourth provide results financial September for will address guidance. XXXX, XXXX quarter

to timing of our David feel recession primarily continue antenna effects of As and we the revenues mentioned, orders customer in for product the in pandemic impacting COVID-XX line. and third purchase the the global quarter receipt the quarter, of

sequentially and third third the However, $X.X margins $XX.X lower expenses impact XXXX, to were compared a and million of some revenues. Revenues operating million offset quarter of strong of decrease XXXX. the lower quarter of gross in the XX% lower

revenues $X.X $X.X line, products at the test Looking million, product the but third compared lower million sequentially, for with X% and by year. measurement quarter an last of revenue increase were

quarter the third XXXX with to than with revenues Antenna product last revenues million quarter revenues compared compared the were safety year. third $XX.X products year last is for lower the for strong transportation technologies, third revenues G X to Antenna XXXX. decreased sequentially and attributable a technologies intelligent quarter lower quarter primarily compared public was The by declined XG. for to products and very decline in but XX% other to $X.X to million

a costs of quarter of quarter year, for our cost the in measurement a sales inventory $X.X non-GAAP as mix XXXX, XXXX. result the to mix, GAAP salaries products million XXXX, and to XXXX profit their percentage margin test compared prior compared third employee operations. full as gross this compared improved of quarter Operating lower amortization third third and The year $X.X level. of to profit second by July quarter of XX.X% the due to margin measurement products the a X.X% higher the of measurement was reductions the margin to antenna and to percentage products last we prior compared and by year. Effective higher the lower antenna both to third products. third profitable product was higher and As line profitable but XXXX test costs first XXXX for and due product of the basis mix related assets expenses more percentages XXXX of gross higher Gross amortization on to and quarter products reserves, restored compared million by in quarter expense gross a margin cost of in intangible margin to lower XXXX, of profit year on a in for to due test the China more X.X% employee X.X% third to quarter of the most higher higher absence quarter well were the $X in million basis as

on third of other and to was third the quarter XX% quarter. and and third declared This the $X.X share from compared of in spending We million compared stock. million increased $X.X plans million including of on because and cash would, forecast prior of in compensation EBITDA variable October accounts X, in the impact quarter quarter working its was to million operations Cash for balance cash negative XX, third we business of to third XX, was to our for flow cash per On result demand, a common discretionary very was with share, areas at shareholders of with Free Net generated inventories. expenses remains operating expenses significant the expense for continues sheet the operations, XXXX, about lower insight other quarter. $XX.X on Adjusted the However, $X.X compared of expectations like year. of dividend XXXX flow investments, Due potential compared close pandemic $X.X percentage by decrease the in XXXX. generated long-term financial November contributed and percentage The was record as quarter to $X.X income of to the as the quarter the PCTEL’s receivable million in the earnings a capital regular foreign related will of XXXX, quarter and our $X.XX reductions be XXXX. of quarter million per third paid of in XXXX. third to EBITDA the in in to XXXX to exchange third $X.X November and $X.XX revenue was XXXX dividend XXXX. expense the of to chain investments quarter of Non-GAAP XXXX supply our third in investors however, $X.XXX results. the and net to a due interest debt. difficult we the million. and of no XX% disruptions the compared provide quarterly during cash our to We customer Adjusted fourth our as the from diluted income be financial for strong third quarter in XXXX. XXXX. of to positive million it $X.X in lower investments quarter losses to uncertainties

and are between the XX%, million project We our profit range to million share $XX be per $X.XX. $XX the revenues XX% We to to margin earnings non-GAAP for to forecasting fourth $X.XX of range of GAAP the the in percentage be gross quarter. in and

are change making possibly circumstances, these projections and based We current could information significantly. upon which

our and protect to our solid and costs strengthen We capital our will continue working financial to manage position.

closing call David remarks. questions, to turn Before over a few I would like the make take we to to

David Neumann

all us. Thank for joining you

The thoughts. those Before recession year we share questions, in impacted to this including the businesses, has closing few I sectors. would take technology many like a

pleased earlier, service how to ability a high our mentioned with employees keep maintain the team the our pandemic, managing responded our customers, our to level of I I’m and safe. of to As while challenges to

remained connectivity that and have profitable, and hardware November who’d the important also take Testing PCTEL will remote attending about a We position, IDEAS attractive anywhere. that, questions. I will access for more improvements remains financial on and custom the from that relies in serve XXXX wireless conference long-term. over as to new to deploying the we see results and markets be like With as investor increasingly our enabling continue Kevin on to PCTEL, finish the to be would will ‘XX. grow Kevin in we virtual industrial I I’m work begin industrial year. we note available that and world will learn Southwest and and those like are Operator? I operating strong IoT infrastructure, ability wireless to the confident

Operator

B. Wiesenberger ahead. Thank first from Marc question And you. Please our Riley. Instructions] [Operator comes go from

Aman Gulani

Aman Hey, guys. Thanks in jumping Marc. And question. taking for for my is this actually

my guess, in projects about the the are time implementation? you many antenna talk or with So phase? the how pipeline yes, to regards I moving commercialization for And And many from line ready to your orders or how latter? typically, are first what’s question, the products? And for trial can or pilot former

David Neumann

Aman. details we we is that, but to joining. Thanks, go given tell Yes. on product Thanks – the XX by NPI product, the not for question. I’m time, I not XX have to what in for any into projects are Thanks you pipeline. can necessarily about going at

Some NPIs of those are customer-driven complexity. at different levels of

that in those as NPIs, possible. the new once they’re with these projects the sees as in a of projects, XX customized a for do ag met, are engineering, an not market. as even to months that actually make X-year can example, then modifications make release customized were platforms reused X of comment – develop development Some will and it we the lot or opportunity even we’re some the that product much with One introductions are But of quickly. the some make other those, and can in existing try investments, relatively that’s system need is, products. that others X And to we maximize probably category of the market. done market-type going a be that we’ll Where then to that do other to to a PCTEL for an technology general the past, the we develop cycles. see solution, we And product or a we’ve about decision and months

as we need able and detailed and take LEGO engineering, being then it our a to leverage subassemblies to – mix we to try building to. match sometimes approach, refer a we those the as So

Aman Gulani

helpful. it. Got That’s

are with seeing my And from talk any XG for all what non-standalone? XG for XG question, the understanding create a you started of Sorry, opportunity can stand-alone? other stand-alone. consistent to to PCTEL? stand-alone non-standalone you that you China potential about moving so next my around, providers that in XG XG see is that have additional do move way sort Because PCTEL? from to opportunity and as Is that Does

David Neumann

to non-standalone right. a it China you and I initial From over and perspective, using lot did matter go non-standalone, the are difference and network between a relatively XG Yes, quickly. though, because think doesn’t a is, our XG connection. to – right big up switch then stand-alone with you’re to everything set LTE the the you is doing it connection, Stand-alone standalone independently.

same So you issues RAN. for with testing still the have the applications, the

from coming are tower receivers scanning signal to the the measuring UE. Our the

the So you look for want benchmark want you to optimize coverage, to interference, systems.

do, – what and private the a interesting stand-alone same to testing from have application does for don’t and it. change you in But network doesn’t then the to too is is, is perspective, I operator the facility So XG necessarily version add networks, very an private think which need LTE much.

will to And it’s So because with good think, applications. another application. it’s We collect receivers in-building. we you allow use then, stand-alone, scanning the software that tools I testing accelerate that have private do XG for us,

up applications, But pretty the think, so is both types the And stand-alone, additional across expands the application of XG. I opens market. testing consistent which

Aman Gulani

the Got the can you. the winners, it. in CBRS well upcoming impact potential auction as as auction, of Thank December? And about talk you C-band the recent then

David Neumann

Yes.

C-band, band well, and and tools, new our have radios. scanning as the measurement, and are is one it’s advantages measurement software-defined test all receivers I general, So think any test in good XG with for we PCTEL XG whether and, companies. CBRS or our that actually, of And receivers scanning other

well. the frequencies megahertz and gigahertz So XXX waves the X.X also band as believe, I that means they support meg, from then of a up sub-X to range millimeter in in

– it’s that enables a frequency fall those software in frequency new for bands, those as new bands that from PCTEL’s upgrade that the ranges, release the band auctions as simply in as then of unit. customers’ perspective, long as So long released are

shared So then benefit new – also needs. benefit that, PCTEL which high deploy a opens because want margin. the And software And think a big customers market don’t it’s new huge networks, a they to I a for CBRS spectrum it’s perspective, will where have is system. you upgrade, it’s for it’s think relatively private it’s pure buy our applications of a definitely or a and From be for again, up a gear. to I a because benefactor

to willing others, You and don’t with for the needed. necessarily pay to want you’re spectrum spectrum, licensed share as

Aman Gulani

Got helpful. you. very it. Thank That’s

for are seeing expand talk Can outdoor last of your Do terms in if you what in you wave environments? those potentially that about deployments Just indoor me, an base? I we will what and acceleration, your may. impacts customer business? question have on millimeter underlying deployment see As

David Neumann

wave really millimeter So spectrum operator-dependent. is

gigahertz. a and we I in of the And – seeing first that U.S. first we had We’re had scanning some the both and supported think I sub-X lot the it, millimeter believe of movers were XG receiver

a us it’s So for the good been U.S. market in

So much wave where far. environment, there cover it’s as coverage around around not on deployments really how were works user as issues. mostly but hotspots, they’re throughput, friendly travel it. a millimeter to going Millimeter operators is to going driven wave Initial extremely doesn’t they’re to by to where dense the and going buildings. use increase use it well It’s

why a which going possibility receiver. together, there’s if a each rather it’s you need So exactly that a to more more that are interfere with denser they’re is and sites closer Because closer other. scanning and have footprint, you

scanning driver to optimized, receiver the technology. and for make really need a You it’s sure they’re

still wave. and it there for their auction globally Now sub-X whether globally, haven’t even that bands are countries millimeter frequency started wave, millimeter to or just XG, auctioning it’s or are I not but be a – few quite mean,

Asia quite Tier XG, I So technology would pandemic we’re bit some cycle. completed, deploying business excellent as frequency great in rollout a operators very is seeing Europe of say, Europe in and of world Northeast with still I the business in a of XG in X these the well. – the are a and early growth great, U.S., And as that although guess, the the recovers of auctions as we the world the rest from are see some

Aman Gulani

you. pass it will Thank I on.

David Neumann

Thanks, Aman.

Operator

to time. appears be further no Instructions] [Operator And questions at there this

David Neumann

all to stronger would in The for afternoon. of taking for challenges care XXXX our employees determined made you us have more our our joining Thank definitely and I organization contributions Okay. customers. to made this like thank us succeed. their and

market Thank next So call. to we you. improving you forward the look conditions updating and on

Operator

PCTEL’s This earnings Thank call. quarter conference. for today for third concludes us you joining XXXX our

lines your at disconnect a great day. and this may You time have

David Neumann	Chief Executive Officer
Kevin McGowan	Chief Financial Officer
Aman Gulani	B. Riley

PC Tel (PCTI) 8 Nov 202020 Q3 Earnings call transcript